Key Developments and Strategy: In Q2, Nabors’ JV with Saudi Aramco, SANAD, deployed two newbuild rigs in Saudi Arabia. While two more units are scheduled in 2H 2025, Saudi Aramco awarded a tranche of five rigs in connection with the 50-rig newbuild program. During Q2, cost synergies realized from the Parker Wellbore acquisition made significant progress in achieving the targeted $40 million.
NBR plans to “diversify by service line and by geography.” Following the award of the latest tranche of newbuild rigs, FCF generation from SANAD should be imminent.
Key Drivers In Q2: Quarter-over-quarter, revenues in the company's Drilling Solutions operating segment witnessed the sharpest rise (by 83%) in Q2, followed by the U.S. Drilling segment (11% up). Rig Technologies, on the other hand, witnessed a sequential revenue fall of 17%. Rig margins in U.S. Drilling increased by 2%, while they improved marginally, by 1%, in International Drilling during this period. The company’s net income in Q1 turned to a net loss of $30.9 million in Q2.
The addition of the Parker business accounted for the sharp sequential increase in the Drilling Solutions segment in Q2. In the US onshore operation, a higher rig count more than offset a decline in daily margins.
FCF Turned Positive but Leverage Remained High: NBR's cash flow from operations increased significantly (73% up) in Q2 2025 compared to the previous quarter. As capex decreased, its FCF turned positive in Q2. Its debt-to-equity (4.2x) is high, primarily due to low shareholders' equity and high long-term debt.
Thanks for reading the NBR Take Three, designed to give you three critical takeaways from NBR's earnings report. Soon, we will present a second update on NBR's earnings, highlighting its current strategy, news, and notes we extracted from our deeper dive.
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